H&M second-quarter pretax profit shrinks slightly more than expected

STOCKHOLM (Reuters) - Swedish fashion retailer H&M <HMb.ST> reported a slightly bigger fall than expected in fiscal second-quarter pretax profit on Thursday and flagged higher markdown levels in the third quarter after inventories grew again.

Pretax profit in March through May shrank 22 percent to 6.01 billion crowns (511.02 million pounds) from a year-ago 7.71 billion, against a mean forecast in a Reuters poll of analysts for a 21 percent drop to 6.10 billion.

H&M, the world's second-biggest fashion retailer after Zara owner Inditex <ITX.MC>, earlier in June said sales in the quarter were unchanged, after shrinking in the previous two quarters.

(Reporting by Anna Ringstrom, Editing by Helena Soderpalm)